Browsing by Subject "onshore wind"

Commitments to curb climate change and to cut greenhouse gas emissions have been increasing globally over recent years. De-carbonization and electrification of energy systems is central to reaching these targets and the share of renewable electricity generation is expected to grow rapidly across markets. This growth requires significant new investment into renewable generation technologies. This thesis contributes to the literature on the valuation of renewable energy as investment. It evaluates the attractiveness of onshore wind energy as long-term investment target in the Finnish market. The net present values (NPVs) of two wind farm investment projects are calculated, comparing the sensitivity of the outcomes to alternative rates of weighted average cost of capital (WACC). The project scenarios are defined such that they represent typical project characteristics based on recent data on onshore wind farm projects in Finland. Uncertainty over the future electricity capture prices for onshore wind and the risk of price cannibalization is included in the analysis with a Monte Carlo simulation of the NPV. The probability distribution for uncertain future price outcomes is based on data from a source study that develops several possible paths for the evolution of the Finnish electricity market by means of systemic scenario modeling. The research question is topical, because the financing of renewable electricity investments has been moving from a subsidies-driven model to market-based financing in Finland. The results of the research suggest that the attractiveness of onshore wind investment in Finland is highly sensitive to the WACC rate as well as to the assumptions made about the risk of future capture price cannibalization. It is possible that further policy support will be needed in the future to ensure that growth targets in renewable energy generation capacity are reached.